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Should I Buy Life Insurance? Things to Know Before You Turn 30

18 March 2020 No Comment

Buying life insurance is maximum adulting. Learn when should I buy life insurance, how much to spend, and what to know – here.

Should I buy life insurance?

If you’re on the cusp of turning 30 or you’ve already hit this milestone, it’s understandable that you’re starting to look into life insurance. Purchasing life insurance is one of the most important financial decisions you’ll ever make.

However, life insurance isn’t a must-have. No law requires you to have it and there are instances when buying it might not be the best use of money.

The big question is: how do you determine whether you should purchase life insurance?

Lucky for you, expert help is here.

Continue reading to learn more about life insurance and some of the most important things to consider before making a purchase decision.

But first off:

How Does Life Insurance Work?

When you purchase a life insurance policy, you enter into a contract with the insurance company. You’ll pay regular premiums to maintain the policy for a specified period of time and, in return, the insurance company will pay a certain amount of money to your beneficiaries when you pass on.

Now, there are various types of life insurance policies, and they differ slightly.

The principal types of life insurance include:

  • Term life insurance
  • Whole life insurance.

Term life insurance works just like any life insurance policy, only that the contract is for a specified amount of time. For example, if you purchase a 20-year term life insurance policy, your beneficiaries will receive payment only if you die before the policy expires. If you outlive the policy, you won’t get back any money even if you would have paid premiums throughout the entire term.

Whole life insurance remains in force thorough the policyholder’s lifetimes. It has no term limit.

When you purchase whole life insurance, you’ll pay the premiums until a specified maturity date. If you outlive the maturity date, you won’t pay any more premiums, but the policy will still be active, payable after your death.

Under whole life insurance, you’ll find a couple of variants, such as traditional whole life insurance, universal life, and variable universal life.

Besides the term aspect, another major difference between term life and whole life insurance policy is the cash value. Whole life policies have a cash value component, which is basically a savings account.

You’ll pay higher premiums for a whole life policy, but part of the money will go into the cash component. After several years, you can withdraw money from this cash value or even borrow against it, without impacting the death benefits.

If this information isn’t comprehensive enough, you can always learn more about life insurance policies.

I’m Under 30 Years, Should I Buy Life Insurance?

Now that you know how life insurance works and the various policies you can buy, it’s time to decide whether you should purchase it.

Here are important factors to consider:

You Have People Who Depend on You Financially

Do you have people who depend on you financially? If yes, then it’s crucial to purchase life insurance.

You’re probably saying, “But wait, I’m just 30 years old. I’m not going to die any time soon.”

Sure, it’s not in the natural order of things for a young person like you to die, but life happens. We have seen people who are younger than you die.

So, if you’re thinking that the grim reaper will spare you because of your age, we’re sorry to burst your bubble. Death can come knocking at any time, and when it does, you better have a life insurance policy; otherwise, your dependents will be left languishing in financial turmoil.

By the way, your dependents don’t have to be your offspring. It could be your siblings, your parents, or even adopted children.

You Have a Mortgage

If you’re anything like the average American, you’re only going to afford a house through a mortgage. And if you already have one, it’s high time you purchased life insurance.

Think about this. What would happen to your house if you were to die today?

If you have no dependent whatsoever (you live alone), you might not need to worry about what happens to the house. However, if you live there with your family, your death means someone else will have to continue paying for the mortgage.

What if there’s no one in your household who can afford a mortgage? And even if theirs is, this can be an unexpected expense that will unsettle whoever will take up the bill.

With life insurance, though, you won’t worry about your household losing the house to foreclosure or struggling to pay for it. Once your death benefits are paid out to your beneficiary, they can use the money to pay off the mortgage and any other debts.

Pay for Your Funeral Expenses

A typical funeral in the United States costs upwards of $10,000.

When you die, will your next of kin be able to raise this amount in order to give you a decent burial? Even if they can, you don’t want to burden them. This is why you should purchase life insurance, or they’ll have to find other means to cover the costs, such as with title loans.

Most policies will pay for your last expenses.

Life Insurance Is Cheaper When You Are Younger

The older you get, the pricier life insurance gets. This is because older people are more likely to develop health complications and die, leaving insurance companies with hefty benefits to pay out.

So, whether you’re a single adult who has no dependents, it’s still essential to buy life insurance when you’re younger. Don’t wait until you have someone depending on you to purchase life insurance. By the time this happens, you could be well into your 50s, a time when life insurance is very expensive.

You Certainly Need Life Insurance

Should I buy life insurance?

In all likelihood, you should. Even if we don’t know much about you besides your age, we can conclude that purchasing life insurance right now will be a savvy financial decision. The benefits are worth it.

Keep reading our blog for more tips and insights on personal finance.

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